Published by Global Banking & Finance Review®
Posted on August 3, 2025
2 min readLast updated: January 22, 2026
The UK's potential car finance compensation scheme is expected to be smaller than the PPI redress, according to the financial regulator.
LONDON (Reuters) -Any future motor finance compensation scheme for consumers in Britain would be substantially smaller than the payment protection insurance (PPI) redress scheme that cost banks tens of billions of pounds, the UK's top financial regulator said.
The Supreme Court overturned a landmark ruling on car finance commissions on Friday, easing fears among banks about the cost of an industry-wide redress scheme, though lenders will still likely face claims for overcharging in some cases.
In response to Friday's ruling, the Financial Conduct Authority (FCA) said it would confirm before markets open on Monday whether it planned to consult on a new redress scheme.
"We would expect any outcome, if we are to move forward with an industry-wide compensation scheme, to be substantially less than the PPI episode," FCA chief executive Nikhil Rathi told the Sunday Times newspaper before any decision had been made public.
He did not comment on a specific number, according to the report.
Mis-selling of payment protection insurance cost lenders over 40 billion pounds ($53 billion) to redress between 2011 and 2019.
Lenders, including Lloyds Banking Group, Close Brothers, Barclays and the UK arms of Santander and Bank of Ireland, have already set aside nearly 2 billion pounds between them to cover potential motor finance compensation claims.
($1 = 0.7531 pounds)
(Reporting by William James; Editing by Joe Bavier)
The Supreme Court overturned a landmark ruling on car finance commissions, easing fears among banks about the cost of an industry-wide redress scheme.
The FCA chief executive Nikhil Rathi indicated that any future motor finance compensation scheme would be substantially smaller than the PPI redress scheme.
The mis-selling of payment protection insurance cost lenders over 40 billion pounds ($53 billion) to redress between 2011 and 2019.
Lenders, including major banks like Lloyds and Barclays, have already set aside nearly 2 billion pounds to cover potential motor finance compensation.
The Financial Conduct Authority plans to confirm whether it will consult on a new redress scheme before markets open on Monday.
Explore more articles in the Headlines category
